The Bankruptcy Alphabet – E is for Exceptions to Discharge

Most debts are discharged at the conclusion of a Chapter 7 or Chapter 13 bankruptcy case. I posted an explanation of dischargeable debts HERE, and today I’m focusing on Exceptions to Discharge.

Section 523 of the Bankruptcy Code lists the exceptions to a bankruptcy discharge. Assuming the debtor receives a discharge at the conclusion of the case, any debts not described in § 523 will be discharged. However, some debts that are not dischargeable in a Chapter 7 may be dischargeable in a Chapter 13.

While all of the debts listed below are nondischargeable in a Chapter 7, the debts listed in bold type may be dischargeable in a Chapter 13 (see § 1328(a)). The most common nondischargeable debts under § 523 are the following:

§ 523(a)(1) – Certain taxes (priority taxes under § 507(a)(8), taxes for which a return was never filed or filed within 2 years of the bankruptcy, taxes which the debtor attempted to willfully evade.) Many of my clients are surprised to learn that some taxes are actually dischargeable.

§ 523(a)(6) – Debts incurred through willful and malicious injury to another person or another person’s property. “Willful and malicious” does not encompass negligence. If you intentionally punch a guy in the face at your local tavern and he sues you, his medical bills may be a nondischargeable debt in your bankruptcy. If he slips and falls on your sidewalk because you forgot to shovel, any judgment would probably not fall under this section.

§ 523(a)(7) – Fines owed to a governmental unit.

§ 523(a)(8) – Most student loans.

§ 523(a)(9) – For death or injury caused by the debtor’s intoxicated use of a motor vehicle.

§ 523(a)(15) – Debts owed to a former spouse pursuant to a marital separation agreement, but which do not qualify as Domestic Support Orders. This usually means debts that are in the nature of a property division rather than support.

This edited list of exceptions to discharge and my explanations are intentionally broad and general. Your bankruptcy attorney can tell you if any of your debts fall under one of the § 523 exceptions to discharge.

Bankruptcy attorneys from around the country are taking part in this “Bankruptcy Alphabet” exercise. Please take a few minutes to check out these other blog posts on the letter “E.”